5 Mistakes to Avoid When Negotiating a Business Purchase
When buying a business, you need to be ready, willing, and able, to negotiate. But negotiation is something you need to approach with care. Too many buyers find themselves making mistakes and losing out on what could have been a great deal. Here are five of the biggest mistakes you want to avoid during your own negotiations;
1 – Make an Ultimatum
You want to be strong during business negotiations of course, and so It can be very tempting to make an ultimatum. This is a bad idea. Being too inflexible defeats the point of negotiating at all, becoming overly aggressive and pushy is a primary reason why a lot of sales fall through.
2 – Focusing Solely on Price
Yes, price is vital during negotiations, but remember that price is not synonymous with value. What do you get in return for that price? For example, will you get all of the stock, fittings & fittings, social media accounts, IP, computer systems, standard operating manuals and a handover from the current business? If not, perhaps you can negotiate this into your offer. You need to ensure you’re getting good value for your money, so make sure you get this in writing too by including it in your offer (Heads of Agreement).
3 – Going It Alone
Unless you’re a business broker yourself, you should never attempt to sell a business on your own. A business broker will know the ins and outs of the business negotiation process. They can use their expertise to guide you through. This way, you can be sure you’re getting the best deal possible and not allowing your emotions to take over your negotiating.
4 – Signing Agreements in Your Own Name
As a general rule, you don’t put loan agreements, contracts, or a lease in your name. To buy the business, you should set up a purchasing entity, corporation or Trust to purchase it. Doing this prior to buying allows you to protect your personal assets from business risks. This way, if something were to happen with your business, you wouldn’t lose all of your personal assets.
5 – Letting Emotions Rule Your Decisions
If the other party sees that you invested your emotions into a certain business, you’re already at a disadvantage. They could use this as a way to get an edge over you during the negotiations. Instead, go in with a cool, calm and collected attitude.
If you’re ready to negotiate on a business sale or purchase, contact us on 0409 965 540 or firstname.lastname@example.org to set up a FREE consultation today.